The number of seven-figure IRAs is at a record 391,600 accounts

The number of seven-figure IRAs is at a record 391,600 accounts, per Bloomberg.

The number of 401(k) accounts at Fidelity Investments with balances over one million dollars surged by 20% in the final quarter of 2023, reaching 422,000. This significant increase marks a strong rebound from the 7.7% decline in the previous quarter, as revealed by an analysis released by Fidelity on Tuesday.

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The stock market's gains played a key role in boosting retirement balances last year, with the S&P 500 advancing by 24% following a 19% decline in 2022. This remarkable performance was largely driven by the "Magnificent 7" stocks, which now represent approximately 30% of the market-cap weighted S&P 500 Index. In 2023, Nvidia Corp. surged more than 238%, Meta Platforms Inc. rose more than 194%, and Amazon.com Inc. was up more than 80%.

The number of 401(k) millionaires at Fidelity has only been higher once before, reaching 442,000 accounts in the fourth quarter of 2021. Additionally, the number of seven-figure IRAs has reached a record high of 391,600 accounts.

The average age of 401(k) millionaires at Fidelity is around 59. However, Gen Xers also achieved a significant milestone in the last few months of 2023. Those who have maintained the same 401(k) plan for 15 consecutive years saw their average balances reach $501,000. Despite these impressive figures, the average overall retirement balance at Fidelity remains below the million-dollar mark, at $118,600.

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The total savings rate, which includes both workers' contributions and their employers' matching contributions, stood at 13.9%, consistent with the previous two quarters. Throughout 2023, over 37% of workers with 401(k)s increased the percentage of their pre-tax salary directed into their plan. In the fourth quarter alone, 10% of employees raised this percentage. Furthermore, 78% of 401(k) savers contributed enough to their plan to receive their employer's full matching contribution.

Roth IRA accounts held by Gen Z savers experienced a 50% increase in the fourth quarter of 2023 compared to the same period in 2022.

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